Assignment CALCULATORII FULL SCREEN PRINTER VERSON BACK URCE

Assignment CALCULATORII FULL SCREEN :PRINTER VERS?ON?. BACK URCES Problem 12-2 Fields Laboratories holds a valuable patent (No. 758-6002-1A) on a precipitator that prevents certain types of air pollution. Fields does not manufacture or sell the products and processes it develops. Instead, it conducts research and develops products and processes which it patents, and then assigns the patents to manufacturers on a royalty basis. Occasionally it sells a patent. The history of Fields patent number 758-6002-1A is as follows. Date Activity Cost n) 2008-2009 Research conducted to develop precipitator Jan. 2010 Design and construction of a prototype March 2010 Testing of models Jan. 2011 Fees paid engineers and lawyers to prepare patent application; $383,000 n) art 86,000 29,400 66,300 patent granted June 30, 2011 Engineering activity necessary to advance the design of the y Study Nov. 2012 precipitator to the manufacturing stage Legal fees paid to successfully defend precipitator patent Research aimed at modifying the design of the patented precipitator 86,000 29,400 30,400 2013 April 2014 uly 2018 Legal fees paid in unsuccessful patent infringement suit against a 36,000 competitor Fields assumed a useful life of 17 years when it received the initial precipitator patent. On January 1, 2016, it re Amortization is computed for a full year if the cost is incurred prior to July 1, and no a vised its useful life estimate downward to 5 remaining years. mortization for the vear if the cost is incurred after June 30. The company\'s vear ends December 31. Compute the carrying value of patent No. 758-6002-14 on each of the followino dates: (a) December 31, 2011 ing AS Rights Reserved. A Divison of Type here to search

Solution

a. Compute the carrying value of patent of Dec 31,2011 as follows: Particulars Amount ($) Cost to Obtain the Patent 66300 Amortisation of 2011(66300/17 years) -3900 Carrying value 62400 All the costs incurred prior to January 2011 are related to research and development Activities and were expensed as incurred. b. Compute the carrying value of patent of Dec 31,2015 as follows: Particulars Amount ($) Carrying value as on Jan 2012 62400 Amortisation of 2012($66,300/17) -3900 Amortisation of 2013($66,300/17) -3900 Legal Fees to Defend 29400 Total 84000 Amortisation of 2014(84000/14) -6000 Amortisation of 2015(84000/14) -6000 Carrying value 72000 All costs incurred in 2012 and 2014 are related to research and development activities and were expensed as incurred. c. Compute the carrying value of patent of Dec 31,2018 as follows: Particulars Amount ($) Carrying value as on Jan 2016 72000 Amortisation of 2016(72000/5) -14400 Amortisation of 2017(72000/5) -14400 Amortisation of 2018(72000/5) -14400 Carring value 28800 Legal costs in 2018 are expensed as suit was unsuccessful.